What is the blockchain?

 Simply put, blockchain is a new way of accounting.

In the 15th century, humans began to use the "double-entry bookkeeping method" to keep accounts, so that the numbers in the bank can be trusted by people all over the world, giving birth to global trade and modern capitalism. Everyone's transaction records are stored in intermediaries such as banks, which is a centralized system.

Bitcoin uses encryption technology to skip the intermediary bank with a distributed ledger, allowing all participants' computers to record and confirm together, making it a decentralized transaction system.

Ethereum adds the function of smart contract on the basis of Bitcoin.

Smart contracts are written in programs. According to the contract, they can also be used with financial transactions, so many people use it to issue their own tokens. Smart contracts can also be used to record equity, asset ownership, medical records, certificates, etc., making the development of blockchain have unlimited possibilities.

Let's take a look at how the blockchain has evolved:

Before the blockchain: a centralized world

All transactions must be matched by an intermediary institution and exchange in the center. These centers keep all transaction records so that the global economy and financial system can operate.

For example, 

if A wants to transfer money to B, a bank must be used as an intermediary; for transfers between banks, an intermediary institution (such as a financial company in Taiwan) must be used. Users are required to bear the handling fee, and relevant records are also kept in the transaction center.

Blockchain 1.0: Bitcoin-the beginning of decentralization

Bitcoin has created a new method of bookkeeping. It uses a "distributed ledger"  to skip the intermediary bank and allow all participants' computers to keep accounts together to achieve a decentralized transaction system.

There are two kinds of people on this trading system, one is a pure trader, and the other is a miner who provides computer hardware computing power. The account book of the trader needs to be encrypted by the miner after calculation, and then uploaded to the chain after confirmation by all people on the blockchain. Theoretically, it is not tamperable, traceable, and encrypted.

The behavior of the miner to calculate encryption is called Hash, because for helping with the calculation, the miner can get a certain amount of Bitcoin as a reward. The transaction ledger is scattered in everyone's hands and does not require central storage or authentication, so it is called "decentralization."

No matter whether it is person-to-person or bank-to-bank, each other can transfer money to each other, and there is no need to go through an intermediary, which can save handling fees; the transaction account is encrypted and stored separately, which is safer than ever and transaction records are more difficult to be tampered with.

Blockchain 2.0: Ethereum──Smart Contract Certification

Compared with Bitcoin, Ethereum is the underlying technology of blockchain with more "smart contracts".

A smart contract is a contract written in a program that will not be tampered with, will be executed automatically, and can be used with financial transactions. Therefore, many blockchain companies use it to issue their own tokens.

Smart contracts can be used to record equity, copyright, and intellectual property rights transactions, and some people use it to record medical and certificate information. Therefore, in addition to virtual currencies such as Bitcoin, the unlimited possibilities of blockchain applications are opened.

For example, in the application of the food industry, all data will be written into the blockchain database from raw material production, processing, packaging, distribution to shelves. Consumers can obtain the most complete food production history by scanning the packaging barcode;

In the future, singers can release their albums on a music platform built on the blockchain without going through a record company, and automate music authorization and profit sharing through smart contracts; listeners can directly pay the creative team for each song they listen to. No need to go through online music intermediary platforms such as Spotify.